Judge Daniel S. Murphy, Case Number: 21STCV22685, Date: 2025-05-05 Tentative Ruling

On June 17, 2021, Plaintiff Metabyte, Inc. filed this action against Technicolor S.A., Technicolor USA, Inc., Technicolor International SAS, and Thomson Licensing SAS. The complaint alleges the following causes of action: (1) breach of fiduciary duty and conspiracy thereof; (2) fraud; (3) intentional interference with contractual relations and prospective economic advantage; (4) breach of the implied covenant of good faith and fair dealing; (5) violation of Business and Professions Code section 17200; and (6) aiding and abetting breach of fiduciary duty. The complaint alleges in pertinent part as follows.

Plaintiff Metabyte is a digital video recorder (DVR) technology company. Plaintiff developed and held valuable patents to this technology through its subsidiary, Metabyte Networks, Inc. (MNI). Defendant Technicolor obtained a majority interest in MNI through preferred stock offerings and installed its employees onto MNI’s board. In 2009, using this control, Defendant forced a liquidation of MNI’s patent portfolio at the severely discounted price of $1 million. Because of the liquidation preference given to preferred stockholders, common stockholders like Plaintiff would have received nothing from the liquidation until preferred stockholders received $16.4 million. By rigging an auction whereby its subsidiary won the $1 million bid, Defendant obtained control of MNI’s patent portfolio and deprived Plaintiff of its fair share of the value.

Plaintiff claims not to have discovered the injury until June 2012, when its CEO, Manu Mehta, saw a news report about Defendant being investigated by French authorities for wrongfully acquiring the assets of a different company called Quinta. Upon contacting attorneys for Quinta and being informed that Defendant had also acquired Quinta’s technology at a severe discount, Mehta realized for the first time that Defendant could have undervalued MNI’s patent portfolio.

Pursuant to this, in April 2013, Plaintiff commenced a proceeding in France under Article 145 of the French Civil Procedure Code to obtain relevant documents. In September 2016, Plaintiff also filed a criminal complaint in France, but a French appeals court held in August 2019 that France lacked jurisdiction over the matter. In August 2020, Plaintiff filed a U.S. federal action alleging the same causes of action as alleged here, along with a federal RICO charge. In a decision on April 30, 2021, the U.S. District Court for the Northern District of California dismissed Plaintiff’s claims without prejudice on the grounds that Plaintiff had failed to allege delayed discovery and that the French proceedings did not equitably toll the statute of limitations. Plaintiff voluntarily dismissed the federal action on June 11, 2021 and filed the present action on June 17, 2021.

On November 22, 2021, this Court sustained Defendants’ demurrer without leave to amend, finding that the French proceeding did not toll the statute of limitations. In a decision dated August 9, 2023, the Court of Appeal affirmed the sustaining of the demurrer but granted Plaintiff leave to amend to allege facts demonstrating that it “acted objectively reasonably and subjectively in good faith in electing to seek to hold Technicolor liable in France.” (Metabyte, Inc. v. Technicolor S.A. (2023) 94 Cal.App.5th 265, 280.)

On December 22, 2023, Plaintiff filed the operative First Amended Complaint, adding facts supporting its decision to litigate in France.

On April 4, 2025, Plaintiff filed the instant motion for issue sanctions and other relief. Defendants filed their opposition on April 22, 2025. Plaintiff filed its reply on April 28, 2025.

The instant motion arises from Defendants amending their discovery responses to clarify the status of the patent portfolio at the heart of the lawsuit. Initially, Defendants stated that they had sold the portfolio to a third party. However, Defendants later amended their responses to reflect that they are still in possession of the portfolio. Plaintiff contends that this constitutes intentional deception and discovery abuse. Plaintiff also argues that the verification to the responses was improperly signed by David Shoneman, Defendants’ former in-house counsel.

Plaintiff requests the following relief: (1) issue sanctions; (2) ongoing judicial monitoring of discovery; (3) proper verification signed by a corporate officer, or waiver of the attorney-client privilege as to Shoneman; (4) production of documents; and (5) preservation of Plaintiff’s right to an adverse inference instruction.

The Court may impose monetary or nonmonetary sanctions against a party engaging in misuse of the discovery process. (Code Civ. Proc., § 2023.030.) Misuse of the discovery process is defined as, among other things, failing to respond to an authorized method of discovery, making an evasive response to discovery, or disobeying a court order for discovery. (Id., § 2023.010.)

If a lesser sanction fails to curb misuse, a greater sanction is warranted: continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse. (Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992.) “The penalty should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery.” (Wilson v. Jefferson (1985) 163 Cal.App.3d 952, 959.) Generally, two facts are prerequisite to the imposition of nonmonetary sanctions: (1) there must be a failure to comply with a court order; and (2) the failure must be willful. (Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327.)

Defendants’ amendment to their responses to accurately reflect the status of the patent portfolio does not constitute discovery abuse. “Without leave of court, a party may serve an amended answer to any interrogatory that contains information subsequently discovered, inadvertently omitted, or mistakenly stated in the initial interrogatory.” (Code Civ. Proc., § 2030.310(a).) Defendants were entitled to correct their response upon subsequent investigation. Defendants did not violate a court order or withhold discovery.

Moreover, the requested issue sanctions are without basis. First, Plaintiff seeks to preclude Defendants from denying that they own the patent portfolio. However, Defendants have already admitted in their updated discovery responses that they do currently own the portfolio. There is no basis for an issue sanction to establish a fact which Defendants already admit. Second, Plaintiff seeks to preclude Defendants from making any argument regarding the value of the portfolio. This has no relation to the subject discovery responses, which pertained to whether Defendants own the portfolio or transferred it to a third party. In other words, the requested sanction is disproportionate to the dereliction.

As stated above, Defendants’ amended responses do not reflect discovery abuse. Thus, there is no basis for judicial monitoring. It is also not the Court’s duty to continuously monitor the parties during discovery. If Defendant engages in discovery abuse, Plaintiff may file the corresponding motion for sanctions or motion to compel at the appropriate time.

“The party to whom the interrogatories are directed shall sign the response under oath unless the response contains only objections.” (Code Civ. Proc., § 2030.250(a).) “If that party is a public or private corporation, or a partnership, association, or governmental agency, one of its officers or agents shall sign the response under oath on behalf of that party. If the officer or agent signing the response on behalf of that party is an attorney acting in that capacity for the party, that party waives any lawyer-client privilege and any protection for work product under Chapter 4 (commencing with Section 2018.010) during any subsequent discovery from that attorney concerning the identity of the sources of the information contained in the response.” (Id., § 2030.250(b).)

Plaintiff argues that Defendants’ responses are improperly verified by its former in-house counsel, David Shoneman, because Shoneman participated in the underlying conduct at issue and therefore has a conflict of interest. Plaintiff argues that a corporate officer should verify the responses instead.

However, the Code clearly allows the verification to be signed by an officer or agent. Shoneman can sign the verification as an agent of Defendants, regardless of whether a corporate officer was otherwise available to provide a signature. If Shoneman is an agent whose knowledge of the facts provided the basis for the responses, then he properly verified the responses. Plaintiff cites no authority suggesting otherwise. The fact that Shoneman has an interest in the wellbeing of Defendants is immaterial, as that would be true of any officer verifying a discovery response on behalf of Defendants.

Since Shoneman’s verification is proper, Plaintiff alternatively requests a finding that “Defendant has Waived Attorney-Client Privilege and Work Product Privilege with Shoneman at all times.” (Mtn. 9:4-6.) However, no discovery pertaining to Shoneman is currently at issue. The Court will not prospectively determine a waiver of privilege when no particular information is at issue. If Defendants attempt to withhold information under the attorney-client privilege that is otherwise disclosable under section 2030.250(b), Plaintiff can file a motion to compel at the appropriate time. Furthermore, the Code specifically limits waiver to information “concerning the identity of the sources of the information contained in the response.” (Code Civ. Proc., § 2030.250(b).) There is no basis to broadly waive the privilege as to Shoneman “at all times.” Plaintiff’s argument on waiver is both premature and overbroad.

In sum, the responses have been properly verified by David Shoneman, and the Court will not prospectively determine a waiver when no particular information is at issue.

Plaintiff broadly requests that Defendants be compelled to produce “all outstanding documents” without specifying which RFPs are actually at issue. If Defendants have withheld documents despite issuing statements of compliance, Plaintiff may file the appropriate motion under Code of Civil Procedure section 2031.320(a).

Lastly, Plaintiff seeks to preserve its right to an adverse inference instruction to inform the jury of Defendants’ discovery abuse. As stated above, Defendant did not engage in discovery abuse. But in any event, the trial has not begun, and jury instructions are not currently at issue.

The Court will not make a preemptive ruling on any jury instructions at this stage.

Plaintiff’s motion for issue sanctions and other relief is DENIED. Defendants’ request for sanctions is denied.

On December 22, 2023, Plaintiff filed the operative First Amended Complaint, adding facts supporting its decision to litigate in France.

On April 2, 2025, Defendants filed the instant two motions to compel Plaintiff’s further responses to special interrogatories and requests for production. Plaintiff filed its opposition on April 22, 2025. Defendants filed their reply on April 28, 2025.

Upon receiving responses to its discovery requests, the propounding party may move for an order compelling further responses if the responses are incomplete or evasive, or objections are without merit or too general. (Code Civ. Proc., §§ 2030.300(a), 2031.310(a), 2033.290(a).)

A party “is entitled to demand answers to its interrogatories, as a matter of right . . . [and] the burden of justifying any objection and failure to respond remains at all times with the party resisting an interrogatory.” (Williams v. Sup. Ct. (2017) 3 Cal.5th 531, 541.) By contrast, the party seeking production of documents bears the initial burden of showing good cause through a fact-specific showing of relevance. (Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.) Once this showing is made, the burden shifts to the responding party to justify any objections. (Ibid.)

A motion to compel further must be accompanied by a meet and confer declaration demonstrating an attempt to resolve the matter informally. (Code Civ. Proc., §§ 2030.300(b)(1), 2031.310(b), 2033.290(b).) The Court finds that Defendants have satisfied the meet and confer requirement. (See Wegner Decl.)

A central issue in the case is the statute of limitations, specifically equitable tolling. “To determine whether equitable tolling may extend a statute of limitations, courts must analyze whether a plaintiff has established the doctrine's three elements: timely notice to the defendant, lack of prejudice to the defendant, and reasonable and good faith conduct by the plaintiff.” (Metabyte, supra, 94 Cal.App.5th at p. 277.)

The discovery requests at issue seek information pertaining to the third element, i.e., whether Plaintiff initiated the French proceeding reasonably and in good faith. The requests are adequately tailored to this topic and are backed by good cause. However, Plaintiff refused to provide all responsive information or produce all responsive documents, citing the attorney-client privilege.

The attorney-client privilege covers “information transmitted between a client and his or her lawyer in the course of that relationship and in confidence.” (Evid. Code, § 952.) “The privilege is absolute and precludes disclosure of confidential communications even though they may be highly relevant to a dispute.” (City of Petaluma v. Superior Court (2016) 248 Cal.App.4th 1023, 1032.)

However, “[t]he privilege may . . . be impliedly waived where a party to a lawsuit places into issue a matter that is normally privileged.” (Transamerica Title Ins. Co. v. Superior Court (1987) 188 Cal.App.3d 1047, 1052.) “[T]he deliberate injection of the advice of counsel into a case waives the attorney-client privilege as to communications and documents relating to the advice.” (Id. at p. 1053.) “[T]he person or entity seeking to discover privileged information can show waiver by demonstrating that the client has put the otherwise privileged communication directly at issue and that disclosure is essential for a fair adjudication of the action.” (S. Cal. Gas Co. v. Public Utils. Com (1990) 50 Cal.3d 31, 40.)

Here, Plaintiff has placed the advice of counsel directly at issue because Plaintiff has identified counsel’s advice as support for its reasonable and good faith decision to initiate the French proceeding. Plaintiff alleges that “Mr. Mehta contacted the French lawyers for Quinta. From the news report and in preliminary conversations with Quinta’s counsel, Mr. Mehta learned that Quinta contended that TECHNICOLOR had invested in Quinta and then destroyed its business, driving it into bankruptcy, while also acquiring Quinta’s technology for € 700,000 when it was valued at over € 36,000,000.” (FAC ¶ 41.) Plaintiff’s allegations describing the reasons why its actions were reasonable and in good faith patently consist of legal advice or the opinions of counsel, even if Plaintiff does not explicitly identify them as such. (Id., ¶¶ 42-51.) Furthermore, Plaintiff stated in other responses to discovery that its decision to initiate the French proceedings was “[b]ased upon consultations with Metabyte’s French attorneys.” (Wegner Decl., Ex. G, Resp. to SROG No. 26.)[1]

In sum, Plaintiff has placed its counsel’s “advice or state of mind” directly at issue. (See S. Cal. Gas Co., supra, 50 Cal.3d at p. 42.) This results in waiver of the attorney-client privilege. Plaintiff cannot have it both ways by relying on the advice of counsel to justify the reasonableness of its decision to pursue the French proceedings while withholding evidence of that advice from Defendants.

Additionally, the privilege is waived “if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to disclosure made by anyone.” (Evid. Code, § 912(a).) However, the privilege is not waived “when disclosure is reasonably necessary for the accomplishment of the purpose for which the lawyer . . . was consulted . . . .” (Id., subd. (d).) “Together, sections 912 and 952 will permit sharing of privileged information when it furthers the attorney-client relationship; not simply when two or more parties might have overlapping interests.” (Seahaus La Jolla Owners Assn. v. Superior Court (2014) 224 Cal.App.4th 754, 768.)

The communications at issue have been disclosed to a third party, Pierre Ollivier. (See Plntf.’s Ex. A (privilege log).) Plaintiff contends, through the declaration of Mr. Mehta, that “Pierre Ollivier has been retained by Metabyte, through his consulting company Winnove, to provide communication support across the linguistic barriers between France and the U.S. in connection with the Metabyte v. Technicolor litigation and related settlement discussions.” (Mehta Decl. ¶ 5.) This vague characterization of Mr. Ollivier’s role is insufficient to demonstrate that Mr. Ollivier was a reasonably necessary party to the communications at issue.

Plaintiff has previously characterized Mr. Olliver as an executive of Technicolor, a translator, a neutral, and an employee of a French law firm. (See Mtn. 16:12-17:6.) Plaintiff’s fifth and most recent characterization of Mr. Olliver as a “litigation and settlement communications coordinator” is unconvincing. (See Opp. 10:2-14.)

Thus, the attorney-client privilege has been waived for the independent reason that the communications at issue were disclosed to a third party.

Defendants’ motions to compel further responses are GRANTED. Plaintiff shall provide supplemental responses to the subject discovery requests within 20 days of this order.

[1] Plaintiff claims that it has since updated its response to SROG No. 26 to omit the reference to attorney consultation. However, Plaintiff neither cites nor attaches any evidence of this purported updated response. Defendants deny receiving any updated response. In any event, as with the FAC allegations, the facts stated in the new response patently reference legal advice even if Plaintiff does not explicitly mention legal counsel.